• Federal Budget 2016 - International

Increased Administration Penalties for Significant Global Entities

As a part of the Government’s proposed measures to tackle multinational tax avoidance, the Government proposes to considerably increase the administrative penalties for companies deemed significant global entities. From 1 July 2017, the penalties for failing to comply with tax disclosure obligations for companies with global revenue of $1 billion or more will be increased by a factor of 100 times.

This will raise the maximum penalty for failure to lodge documents with the ATO from a mere $4,500 to $450,000. Further, the Government will double the rate of penalties relating to making false or misleading statements to the ATO. These measures aim to encourage multinationals to comply with their reporting obligations and penalise those multinationals that are deliberately reckless or careless in their tax affairs.

BDO Comment

By introducing this measure, the Government is responding to the pushback it faced when the increased reporting regime for multinationals was first introduced. At that time, there was some commentary that multinationals may prefer to pay a nominal fine rather than bear the burden of compliance with the increased disclosure obligations. While this strategy may have led them to further scrutiny from the ATO, a potential $450,000 fine is sure to encourage multinationals to comply with their tax reporting obligations.